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2005 (2) TMI 808 - HC - VAT and Sales Tax
Issues: Scope of rule 6(4)(m)(i) of Karnataka Sales Tax Rules, 1957
The judgment revolves around the interpretation and application of rule 6(4)(m)(i) of the Karnataka Sales Tax Rules, 1957, specifically concerning the exclusion of certain amounts from the total turnover for the purpose of tax levy under section 5-B of the Karnataka Sales Tax Act, 1957. The petitioner challenges the legality of the rule, contending that it subjects exempted turnover to tax, thereby exceeding its scope and violating the provisions of the Act. The petitioner seeks relief by setting aside an assessment order that includes tax on exempted parts of goods involved in works contracts. The petitioner's counsel argues that the rule should be struck down as it increases the petitioner's tax liability by including turnover that is otherwise exempt from tax under section 5-B. Reference is made to judicial precedents, such as the decision of the Supreme Court in Builders Association of India v. Union of India and the Andhra Pradesh High Court's ruling in Media Communications v. Government of Andhra Pradesh, which invalidated similar provisions under the Andhra Pradesh General Sales Tax Act. The court clarifies that the liability is under section 5-B, not the rule itself. Rule 6(4)(m)(i) operates to exclude certain turnovers from the taxable turnover for computation purposes. It does not create a liability but rather aims to reduce the scope of liability by excluding specific amounts during turnover calculation. The court emphasizes that the rule does not control section 5-B and cannot be deemed ultra vires unless it creates a liability beyond what is provided for in the Act. Ultimately, the court finds that rule 6(4)(m)(i) is an enabling provision to limit liability and is not invalid or ultra vires the Act. In conclusion, the petitions are dismissed, allowing the petitioner to pursue available remedies. The court directs that if an appeal is filed promptly, the appellate authority should consider the pendency of the writ petition when assessing the question of limitation.
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